Going Global

Going Global

Capillary Technologies’ cloud based retail CRM solution breaks barriers as it finds a market globally

From the time it started in 2008, when Bengaluru-based Capillary Technologies (Capillary) had to go knocking on the doors of retail businesses to convince them of the mobile CRM solution they had developed, to today, there is a world of a difference. And Capillary, with its first mover advantage, has been able to tap the spurt in omni-channel retail where mobile, online stores and social media integrate to give customers a uniform shopping experience, thus building loyalty and improving ROI. As shoppers have lots of options today, retailers are increasingly turning to technology to acquire, store and analyse customer data to come up with meaningful retail offerings that bring customers back to their store.

Future Group’s apparel division gave the company the breakthrough it required in 2009. Ever since, there’s been no turning back. Capillary has customers across retail segments – be it grocery, hypermarkets, departmental stores, footwear, fashion to food and beverages in QSR (quick service restaurants) and fine dining. And, the company serves not only the Indian markets but has a presence across the world with 16 offices spread across the U.S., Singapore, Europe, Middle East, Africa and Far East.


“WE BENEFITED TREMENDOUSLY FROM ALL OUR INVESTORS BECAUSE OF THEIR EXPERIENCE AND EXPOSURE. WE WERE FIRST TIME ENTREPRENEURS, AFTER ALL. BUT TO BENEFIT FROM INVESTORS AND MENTORS, ENTREPRENEURS MUST ASK, SEEK HELP AND BE PROACTIVE.”


Simply tech

The improvements in IT and mobile technologies have changed the way people and businesses work. A lot of emphasis has been placed on tying customer need to the discounts and offers being announced. For this, retail businesses need an understanding of customer preferences and their earlier buying trends. This is collected as data, which is then analysed by experts who interpret the behaviour and find optimal solutions to attract the customer back to the online or the brick and mortar store.

While such data was easily available for customers shopping online, information about walk-in customers was hardly available, as people didn’t have the willingness to fill up physical forms. With Capillary’s CRM solution, all that a customer needed to share was a mobile phone number.

Today, Capillary integrates the various ways in which a customer interacts with a store. An emerging trend in retail business, it recognises the need of the customer to be recognised whenever he or she has a transaction in that store, from whichever channel – the physical store, the online store, the social media site or the mobile phone. The potential for solution providers is estimated to be in billions of dollars as small and large stores are realising that it is critical to create one-to-one offers for its customers to survive in an ultra competitive environment.

There are large and small solution providers as well. But Capillary’s cloud based SAAS solution is priced competitively. Its modularity allows customers to sign up for services based on requirements. “We have a strong research and development team which enables us to release three new features, every week,” says Krishna Mehra, co-founder and CTO. As a result, the implementation times and the resultant wait period for ROI are also short.

But what really gives it an edge is its end-to-end service offering.

Data in, strategy out

As important as its product development is the consulting service that Capillary offers its customers. Since 2011, its team has grown three times to touch 350 employees. Analytics, developing customer strategy and improving customer service are some of the other services offered by Capillary. “Different customers have different requirements and we tailor products and services accordingly,” says Mehra.

Interestingly, he also points out that even in developed markets, the pain points are the same and the existing solutions are not enough to solve them. “Our expansion into the foreign markets began through our existing customers, who introduced us to their partners in other markets,” he explains. In 2011, the company set up offices in London, Dubai and Singapore.

Team building has been very focused, with the right fit being paramount. The company has formalised recruitment, growth and training aspects of team hiring and retention and is proud to have many of its employees heading several aspects of the business.

“Our successful establishment of international business has enabled us to grow faster,” says Mehra. While its revenue from India has grown three times, international revenues have gone up from a single digit figure to 50 per cent of the overall revenues. He adds that US $50 to US $100 million in the next couple of years is a very achievable target.

In consolidation mode

The company was recently funded to the tune of US $15.5 million by Sequoia Capital and Norwest Venture and its goal is to improve profitability. The funding was used to expand its global sales force, to improve infrastructure for R&D and engineering, and to establish a delivery centre in Bengaluru.

The company already has a successful presence in every country it has forayed into. The next phase will focus on consolidating its presence in these regions and reaching out to more customers. “We encourage healthy competition between the teams in the different regions to strengthen and expand our reach,” says Mehra.

Started by three friends from IIT Kharagpur – Aneesh Reddy, Krishna Mehra and Ajay Modani – the company has been in the right place at the right time with the right ideas and technologies. Capitalising on the overwhelming technology revolution with its cloud-based SAAS has worked well for Capillary and the company has managed to win over 150 retail brands not only in India and developing markets but developed markets as well. Marks & Spencer, Puma, Nokia, Nike, Max and Peter England are some of the brands it is works with.

More importantly, instead of a sell and exit policy, what has won Capillary loyalty from clients is the post-sale services that go beyond bug fixing to contributing to the clients’ customer retention strategy, which has ensured in strengthening its relationship with them. Empowering teams, hiring a global workforce and cultural retraining have enabled the company to develop a global strategy with stress on localised offerings.

No wonder then that Capillary, which currently works with 10,000 stores, expects to work with 50,000 in two to three years.

Then Now
Three international offices 16 international offices
Revenue from international business – single digit Revenue from international business – 50%
Main presence in apparel retail Across retail segments – apparel, QSR and grocery are the main revenue streams
Team strength: 100 Team strength:  350

STARTUP SCHOOL WITH KRISHNA MEHRA, CO-FOUNDER & CTO, CAPILLARY TECHNOLOGIES

Capillary Technologies’ fairy tale growth has come with hard learning. The company’s mobile CRM product helps retailers understand their walk-in customers and their buying trends. It also integrates customer information across platforms to enable retailers to devise strategies that give the customers a unified shopping experience. But beyond offering cloud-based software as an application service, Capillary also offers analytic services and works with its customers closely, depending on the level of engagement required by them.

Working on a relevant problem 

Capillary found a way to address the pain points of retailers who had no way to understand the buying behaviour of their customers. The product Capillary developed has found customers not only in India but abroad as well, making it one of the few companies to have achieved reverse innovation. Krishna Mehra, co-founder and CTO believes the following points helped them achieve this:

We remained focused on product development and refused project work.

We went for a product that had a large market instead of a niche product where room to scale up is limited.

We focused on building a solution that addressed a customer problem.

We remained small in the initial days, which helped us prioritise resources.

Hired a rock star team from the start as without one we could not have developed the product we did.

Bridging the cultural divide 

Many ventures try to expand internationally but unless the ingredients – the product or service, the packaging and promotion – are right, it can prove disastrous. Mehra admits there are several critical differences and shares how Capillary went about its expansion globally:

Starting in the Indian market was a good decision as it is very forgiving and gave us time to fine tune our product and services and keep our development costs lower.

To succeed in global markets, have local faces, especially in the front end. This builds confidence in the clients.

Softer issues are more challenging due to cultural differences. Cross cultural training and allowing the global workforce to interact with each other is important to understand these differences.

Investing in the right people 

While vision gives direction, it is the team that can ensure that the organisation delivers on that vision. Capillary has been very clear about the people it wants in its team and not compromised on the quality of talent it hires. Mehra explains Capillary’s mandate:

Vision and quality of work are important for employees to opt to work for a company.

Professional challenges and growth path are important for sustained interest in an organisation. Employees must feel they are contributing meaningfully and putting in 110 per cent effort towards achieving the vision.

Salaries must be as per market benchmark. But this is not the main clincher to choose a company.

Learning from your investors 

Mentors and investors are a warehouse of knowledge. It is up to the funded companies to utilise the knowledge by tapping into it. Mehra says that the investors can not only fund ventures but also help organisations expand their vision and forge new paths. He explains how Capillary benefited from having its investors on board.

We benefited tremendously from all our investors because of their experience and exposure. We were first time entrepreneurs, after all.

While our eyes were on operations, they helped us look up and beyond, to have a vision.

They challenged us with new ideas and brought in a network.

But to benefit from investors and mentors, entrepreneurs must ask, seek help and be proactive.

Friends as founders 

Professional and personal relationships don’t mix as each puts a strain on the other.

Capillary was started by three friends. How do they overcome the pitfalls that bog the unholy mix of being partners at work? Mehra shares the secret:

Several startups are founded by friends. Many also fail because of differences that crop up, leading to the failure of the venture as well as the friendship.

Keeping the relationship strong is important. Differences will crop up, but they must be thrashed out openly.

Weekly meetings over the phone or in person are important to air views and seek opinions.